January 20 2022
As an agent or broker, you are often required to spend money in order to make it. Before you can collect commission on a home, there are a variety of tasks you must complete, such as marketing the property, promoting yourself to attract clients, handling your business operations, and much more. The costs of these business necessities can add up quickly. So being aware of some tax tips for real estate agents can save you a significant amount of money every year.
Of all the tax tips for real estate agents, being aware of the allowable deductions available to you, and taking full advantage of them, is the best tip you can take. Even minor costs that aren't critical to your business, but are related to it, can be deducted.
Listed below are some of the most common agent and broker deductions:
It is important that you document all your business expenses so you can accurately deduct them on your tax forms. Since you are more than likely considered self-employed and required to fill out a 1099 at the end of the year, carefully tracking your business expenses is vital in order to obtain the most deductions. This allows you to keep as much of your income as possible every year.
Remember that only real estate business expenses are eligible for deductions. For a general rule, all expenses deducted must be ordinary, necessary, directly related to your business, and for a reasonable amount. To ensure you are following this rule, carefully consult IRS Publications 463 and 535 or a real estate tax specialist for more specifics.
You have a ton on your plate every year, and ensuring your business taxes are in order can take quite a bit of time. So if you find yourself falling a little behind on making sure your taxes are in tip top shape, no need to stress. You can file for an extension, allowing you to file your taxes six months in the future.
An extension doesn't allow you to pay your taxes at a later date, though. You still must pay your best estimate of what you would owe. Then at the end of six months when you have everything in order, you can account for any adjustments.
Keeping all the ins and outs of your real estate business taxes straight can be very difficult, especially if you are a new agent or if taxes just really aren't your thing. Regardless of how comfortable you are with filing your business taxes, though, it is still important to consult a professional.
One mistake could be very costly for you and your business. A real estate tax specialist will help you avoid this predicament, and ensure that everything is in order. They will walk you through every tax tip for real estate agents, and even help you get your fillings straight. So consulting one is definitely in the best interests of you and your business.
To view the original article, visit the Transactly blog.